Global-e online (NASDAQ: GLBE) has been a hot stock since its IPO in May. It has been a public concern for two months at the time of this writing, and stock prices have more than doubled since their stock market debut.
The timing could be quite bad for a stock purchase right now. (I prefer to wait at least a quarter after a company’s IPO before making an initial purchase.) However, if you plan to buy now and leave that investment indefinitely, Global-e could be a good place to go. for money. It is still a very small player in the huge global e-commerce industry.
Hanging up by the evaluation?
Global-e’s run after just a few months as a public concern has been impressive. If the company’s roughly $ 3.5 billion enterprise value (market cap minus cash and cash equivalents) got you thinking in May, it’s now valued at over $ 8 billion. It’s no longer a small name to be discovered in e-commerce.
However, there is a good reason for the rapid rise of Global-e. First quarter 2021 results were released in June and the gross value of goods (GMV) sold using the Global-e platform increased 133% from a year ago to 267 million of dollars. GMV for the full year of 2021 was forecast at $ 1.23 billion at the midpoint of forecast, implying growth of around 59% from 2020.
But GMV is not the same as income. Global-e’s actual sales on a GMV basis in the first quarter were $ 46.2 million, and the mid-point of full-year revenue guidance projects revenue of around $ 211 million . This corresponds to an impressive growth rate of 55%, but it values ââthis stock at 36 times the expected sales for the year 2021 relative to the enterprise value. Although it is still a small player among the giants of global digital commerce, it is profitable. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be at least $ 16.2 million in 2021. But based on financials alone, Global-e is an expensive stock at this point.
Another decade of digital commerce growth awaits
The current assessment, however, does not provide an overview. It is a high growth company, and its niche in global e-commerce is actually quite large. It operates in the cross-border trade space, helping traders sell their goods in countries other than their own. Various services include website navigation and chat in local languages, local tax payments and calculations, shipping and logistics, marketing, and more. Spending on cross-border e-commerce is expected to reach $ 736 billion in 2023, according to a report by technology researcher Forrester.
With an expected GMV of $ 1.23 billion for 2021, Global-e controls a fraction of a percent of the total cross-border e-commerce market. Its rapid pace of expansion could therefore continue for the foreseeable future if it manages to attract more online sellers with its software suite. A recent tag team with Shopify (NYSE: SHOP) that integrates Global-e’s services seamlessly with Shopify’s services might help. Shopify is a powerhouse with nearly 2 million merchants around the world. The company itself continues to grow rapidly and has a vested interest in the success of Global-e. It invested $ 193 million in its smaller counterpart before the IPO, so fostering greater adoption of cross-border selling would be a victory for these two technologists.
Of course, there is a risk that Global-e is too much of a niche company. If the international movement of goods does not continue to grow, it is also possible that Global-e’s growth will stagnate. But e-commerce is still in the early stages of development in most countries, and Global-e could be an integral part of removing some of the barriers that have so far prevented some developing economies from moving into the business. consumer online (such as businesses using mobile websites and delivery logistics). Global-e is armed with $ 431 million in cash that it raised during its IPO, so it is well positioned to help advance the cause of e-commerce.
Is Global-e a millionaire’s share?
Global-e could certainly help an investor build wealth even after rapidly doubling in size since going public. After all, doubling once isn’t a millionaire, but stocks that can double multiple times are. And even with an enterprise value of around $ 8 billion, it is a small business because the retail business in the world is worth a lot. Billions dollars every year. Home to a fast-growing segment of a fast-growing secular trend, Global-e deserves a place in investor portfolios if hyper-growing companies are what you are looking for. Just keep in mind that with a volatile stock price comes rapid expansion and a high price tag. If you want to take a position here, start small (I usually start with a buy worth less than 1% of my portfolio’s value), so you can buy more over time.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.